After a landslide victory at the ballot box, a battle with the Supreme Court and a Republican-led Legislature stepping in to support the will of the voters, Mississippi finally has a medical marijuana program that is growing, serving patients and seeing businesses take root in its communities.
But, like the rest of the country, the Magnolia State is also contending with the flood of hemp-derived products that were legalized with the passage of the 2018 Farm Bill.
Marijuana Venture spoke with attorney Conner Reeves, of the Mississippi law firm McLaughlin PC, about the state’s emerging legal cannabis industry, the challenge of attempting to regulate hemp-derived products and the parallels between cannabis and the end of alcohol prohibition.
Marijuana Venture: Before we talk about the current cannabis landscape in Mississippi, can you provide a little background into the state’s medical marijuana program?
Conner Reeves: We talked a couple years ago when Mississippi became the 35th state, I believe, to pass a medical cannabis law. Originally, it was a ballot measure that passed by the highest margin of any ballot measure in the country for medical cannabis, with 74% of Mississippians voting “yes” on that.
Then our Supreme Court overturned the vote, and the Legislature actually picked it up and carried over the goal line, which was a bit of a surprise, but they did it really well and created the same program that we would have gotten (through the ballot measure) and, in fact, many aspects of it were better. So Mississippi is now a couple of years into its actual medical cannabis program, and the patient count is growing and it’s gotten a lot of traction. But interestingly, over the past couple years, there’s also been the proliferation of hemp-derived cannabis products that are widely accessible through the internet and via other non-licensed retail outlets.
MV: How prevalent are hemp-derived products in Mississippi?
Reeves: They’re everywhere and they’re coming from everywhere too. Over the past couple of years, as our medical cannabis program has been growing, there have also been a lot of these unregulated products that are available widely across Mississippi.
It’s interesting, because more people are aware of cannabis products and they’re able to try them — they’re buying them at gas stations and other retail outlets — but at the same time, there’s a lot of concern from our Legislature, from law enforcement, from community groups about products that are untested and that they don’t know the source. And it’s confusing: Is this part of the medical program that we just passed or is it something else? So there’s been an effort for the past two legislative sessions in Mississippi to do something about that.
At the same time, we started to see a whole new product enter the market in the past 12 months, which is THC beverages, which are appealing to a whole new market. We see everything from 2.5 milligrams (THC) per can all the way up to 100 milligrams per can.
MV: What is the latest news on any attempts to regulate hemp-derived products?
Reeves: This year, in our legislative session, there was an effort to regulate what I call the CBD-plus unregulated market, but also create a legal pathway for THC beverages specifically. I thought this was a really interesting approach. Our law firm does a lot of work not only in the cannabis space, but also in the alcohol manufacturing space. We work with a lot of breweries and distilleries all over the country, so we’re seeing breweries pivoting and starting to make hemp-derived products.
The thought was for Mississippi to regulate THC beverages like beer. You would need to get a license to produce it, and it would have gone through the three-tier system in the beer world that was set up by the federal government after Prohibition was repealed, requiring separation between a manufacturer, a distributor and a retailer.
I think it was a good way to regulate THC beverages. The bill got a lot of traction, and I thought it was going to pass and we would have some regulations on the CBD-plus side, but also a different kind of regulation on the THC beverage side.
And then, at the very last minute, over the last weekend of the session, there was just too much controversy drummed up. I think a lot of folks couldn’t get their mind around regulating hemp-derived cannabis products, but not applying the same standards of THC beverages. And, because of that, the bill failed.
So we’re back to where we were, which is no regulation over hemp-derived cannabis products or THC beverages. It’s kind of the Wild West of Mississippi right now.
MV: How does that impact the medical cannabis program?
Reeves: We’ve got well-regulated, strong medical cannabis program that is a true medical cannabis program, but it’s also a free market program. We don’t have license caps, but we have some adequate barriers to entry, regarding locations and fees for licenses. But then we also have stores just down the street selling products from wherever.
Unfortunately, the fallout from not passing this bill was that it really hurts the medical cannabis program because it’s a lot more difficult to get people to go see a licensed medical professional that can provide a certification for medical cannabis when you can literally go down the street, and we’ve got gas stations that are selling pre-rolls, they’re selling flower. They’re selling everything on demand, totally unregulated.
I think we’re going to have to take another crack at it next year when the Legislature comes back in January.
MV: This feels like a microcosm of the entire country right now. What are your thoughts from a national perspective?
Reeves: We’re starting to see this around the country. Other states are going, “Well, what do we do about this?”
Some states are trying to ban hemp-derived intoxicating products altogether. Or they’re trying to stick them under the medical cannabis program. Or they’re just allowing THC beverages to come in. I think this is where the market has gotten way out in front of the regulations.
Now the regulators are going, “Wait. What? I don’t even know what all this is.”
There’s still a ton of confusion as to whether this is legal under the Farm Bill. My personal view has always been that the federal Food and Drug Administration says these are not allowed under FDA regulations. But there really has not been much enforcement. The federal government has not done anything to curb the sale of these products. I think it’s going to be very difficult for them to put the toothpaste back in the tube at this juncture.
What it needs is appropriate regulation. I don’t think it needs to be the Wild West. Products need to be tested. People need to have confidence in what they’re consuming. They need to know the products are high quality, that they contain the amount of THC it says on the package, that it doesn’t contain heavy metals or pesticides or mold. To me, that’s a reasonable step.
In Mississippi, we’re not there yet as a state, but this is also across the country. You’re not seeing that level of regulation.
The longer that goes on, the harder it’s going to be for the Feds to put the toothpaste back in the tube and/or kick it to the states for what they want to do.
Mississippi was this close to doing it. Perhaps they can pick it up again next year. I’m sure we will see a lot of changes over the next couple of years. But it needs to be reined in in an appropriate way.
It needs to be appropriately regulated, and look, don’t kid yourself, the main reason the federal government repealed Prohibition on alcohol was for taxes. They wanted another form of revenue. They imposed an excise tax on the production of alcohol, and the federal government made a boatload of money right out of the gate.
MV: Shifting gears a little bit, now that Mississippi has had a medical marijuana program in place for a while, what are your thoughts about the regulated side of cannabis in the state? What are the pros and cons you’ve seen?
Reeves: Our Legislature did a great job of adopting a program that was in the spirit of what the people wanted. They did a really good job listening to the people and responding appropriately.
In some respects, what came out of the Legislature is actually better (than what voters approved).
The core of it, from a business standpoint, has been a free market, which is a double-edged sword. A free market made the most sense for Mississippi, plus I think it tapped into what folks here believe in, which is that we don’t want to have arbitrary caps on licenses that lead to jockeying for why one business was chosen as opposed to another. Let’s let these businesses duke it out, and whoever is the best business, they’ll rise to the top. For the others, it might be a challenge, and we’re starting to see that right now.
We had a lot of businesses come in. Some have done really well. They know how to run a business. They know how to develop brands. They understood the challenges.
Others, who did not have any experience, maybe had a false sense of the ability to magically do really well and make a bunch of money, have fallen off. But that’s the nature of a free market: may the best business win, not having arbitrary barriers in place by the government to dictate winners and losers.
At the same time, we do have some adequate, fairly reasonable barriers in Mississippi, namely geographic. You can’t be within 1,000 feet of a school, church or daycare. In Mississippi, we have a lot of churches, so that’s a very difficult needle to thread.
And then you can’t have two dispensaries within 1,500 feet of each other. So that prevents two dispensaries from opening up across the street from each other. Other than that, it’s up to the businesses to figure it out.
The adoption rate by patients has been slower than I think many expected. We’re sitting at about 56,000 patients right now. I think the goal for the first few years was to get up to about 100,000.
At the same time though, the folks that are in the industry are really turning out some great products. And, on the regulatory side, it’s well regulated. It mostly falls under Mississippi’s Department of Health, which has an entire new division just for this program. They are policing it, but also doing it, I would say, very even handedly.
We looked all around us in the South and done comparisons to who’s done it well and who’s not done it well, in our opinion. And I think of all our surrounding states in the Southeast, Mississippi has a true medical program that is good. It’s not mired in bureaucracy or the good old boy system.
MV: Is there any sort of movement or appetite for shifting to an adult-use program in the not-too-distant future in Mississippi?
Reeves: I think if you asked most people, they would say, “No, I can’t fathom that.”
But then again, a couple of years ago, our Legislature, out of the blue, passed a lottery, and that was a surprise. So we’ve had some surprises and I don’t think anything is ever off the table.
Some people were a little concerned about having an unregulated adult-use market already, and that perhaps allowing THC beverages was a step toward that. And it likely is, because it’s not couched inside the medical cannabis program.
But there was a lot of effort by a whole host of people to create a real medical program. And I think the state is very interested in seeing that work for a period of time.
I think a lot of the people who have invested in the medical cannabis program are anticipating a shift to adult use at some point, but it doesn’t appear that’s going to happen in the next couple of years.
This interview has been edited for length and clarity.